Naira gains all round as dollar floods FX market

The naira on Monday gained across market segment as dollar floods the foreign exchange market following rejection of cash dollar deposit by banks.

Consequently, after trading on Monday, naira gained N5 or 2.3 percent each at Bureau De Change segment and parallel market closing at N215/$ and N217/$ compared with N220/$ and N222/$, respectively, on Friday last week, BusinessDay survey has revealed.
At the inter-bank market, the local currency on Monday appreciated in value against the green back by N0.66/$ or 0.3 percent to close at N198.29k/$ from N198.95k/$ traded on Friday last week.

Meanwhile, foreign reserves has risen to $31.45 billion as of July 31, 2015, from $31.36 billion as of July 30, 2015, according to the data on Central Bank of Nigeria’s (CBN) website.

Currency dealers said the naira would appreciate further as deposit money banks were no longer accepting cash dollar deposit.

Godwin Emefiele, governor, CBN, had earlier in Lagos at a forum with business community, said speculators would lose money.

Aminu Gwadabe, president, Nigeria’s Bureau De Change Association, told Reuters that there was excess liquidity of around $1 billion on the parallel market.

The central bank had early this month fixed 3.5 percent as the spread at which Bureau De Change operators can sell dollars to individuals, and had also limited the amount bank customers could spend using their debits cards abroad.

Also, the CBN had directed that all transactions consummated by a Bureau De Change must have the Bank Verification Number (BVN) of custom with effect from August 1, 2015.

The circular, which was signed by Kevin Amugo, director, financial policy and regulation department, CBN, stated that this was to ensure that correct BVN was recorded by the BDC and included in the returns to the CBN.

Consequently, the BDC operators are aggressively pursuing the implementation of CBN’s forex policies. A text message flying among the BDC operators, made available to BusinessDay reads, “to all BDCs: this is to advise you all to fund your account for your bidding till further directive from CBN/ABCON. Also submit the names of two staff as validates as stated in the BVN validation excel format and all necessary information as requested by CBN.”

When contacted, Andrew Elueni, managing director/CEO, Flawless Capital Limited, said, “BDCs are not supposed to sell above CBN’s limit rate.”

Presently, he said people buy from BDCs and sell, adding that the mark-up or profit margin had reduced from N45/$ to N20/$.

Elueni, who is a major operator in the BDC segment of the foreign exchange market, said the market was becoming normal and that in two weeks period, the naira/dollar exchange rate would return to N208/$.